NHBC Interview

Mike Quinton, Chief Executive of the NHBC, tells Showhome’s Chris Beck about the latest housing registration figures and the state of the wider market

Would you say that the most recent figures indicate a more stable market than we’ve maybe seen before?

The first thing I would say is that we are seeing growth in 2015. That said, I don’t expect to see 10-20% jumps in new registrations in future years any time soon – looking at the longer term, it’s easy to forget the massive drop we had in 2008/9 and the double-dip we’ve had since then. The market has recovered well, and strongly, since then. I’m expecting to see continued growth of around 5% or so for the next few years. It’s not worth drawing conclusions on the Q3 figures alone – the longer-term data gives a lot more away. Typically, you do see a drop off around August and September, and last year we saw a very strong late summer period, so this year’s dip is nothing to worry about too much!

The market is still very buoyant, and that’s the other point I was going to make. I speak to a lot of house builders and they are very upbeat; recruiting new people, opening new offices and so on. The issue they have is finding the best people and keeping hold of them – that goes for regional managers or bricklayers. They are getting there, though, and this will only help continue the growth.

It’s good to see regional growth outside of London and the South-East as well.

Again, this sort of thing is always patchy from just looking at the numbers, but it’s great that we are seeing growth pretty much everywhere. In 2013, we saw the headline-grabbing figure of 28% growth in the UK, but that was all mainly concentrated down in London and the South-East. That has changed dramatically since then and it’s now a lot more widespread. People might now look at London’s figures and think maybe the market has petered out, based on the fact that the figures are 5% down for the year as a whole, but if you compare Q3 2014 to Q3 this year, it’s actually up by about 25%. Even the 5% drop this year is nothing to worry about. As I said, the numbers are always a bit spiky, especially in London where there are massive developments instead of ten or 20 houses here and there.

Looking at the regions, it’s very good that we’re seeing growth pretty much everywhere. You could say that two regions have dropped, but equally in the next quarter they could be up again. You need to look at the absolute figures as well – while the growth is amazing in Northern Ireland and the Isle of Man, the overall numbers are clearly a lot smaller. What’s interesting in Northern Ireland in particular is that there are no large builders – they are all small ones. They were hit the hardest around the UK in the recession, but this demonstrates how well they are rebounding from that. We’re seeing a lot of the smaller guys starting to come back to the market, which can only be a good thing.

Why do you think the regions are getting stronger?

Builders will build what they can sell, so what’s driving the market is consumer confidence around the UK. If you look at the data, it’s clear that confidence in the market is returning and, importantly, being maintained. Mortgages are becoming easier to get again, and so demand is growing. You can correlate new house build numbers with the number of overall transactions in the housing market.

Confidence is a big deal: Builders will only do what they think will work and will build what people will buy.

In terms of housing types, flats enjoyed a peak a few years ago, but are now on the decline as detached homes become more popular again. Why do you think that is?

It all boils down to the fact that we are reversing John Prescott’s focus on high-density housing. We’re now getting to the stage where the trend will be for bigger homes. Bungalows will always be uncommon due to the high cost of the land. In the early 2000s, there was a period where the builders were building what they were being told to build by Government. This meant a lot of flats, which ultimately were left unsold in a lot of cases. Now, the builders are able to respond to the market and build what they think will sell. It’s what you want the industry to be doing, really.

Do you think the Government could do more to encourage the industry?

I think that there’s a lot out there at the moment and we need to see what comes from it. They’re all relatively new initiatives, and it would be pointless to draw conclusions so early into the new parliament. It’s worth seeing what comes of what we’ve got. There is a lot there that is positive for builders and consumers alike.

The biggest thing the Government can help out with is the skills shortage, but there’s no on/off switch there. We’ve done some work through our Foundation looking at what attracts or puts youngsters off coming to work in the industry, and to see how we can target some key things going forward. We’d like to get a better mix of both genders and ethnicities in the building industry, and that’s starting to happen thanks to some of the debates we’ve been having recently. A number of the major builders are re-opening apprenticeship schemes that were closed down during the recession. The NHBC had an academy that we had to shut in 2008 but has recently restarted. We’ve had about 50 people through that this year already.

During the recession, about 50% of skilled trades just left the industry. It was absolutely decimated. A lot of them either retired or joined different professions, and this has left a real paucity of skills across the entire house-building industry.

Do you think the trend for big developments will continue?

It depends on demand, yet again. If there’s a peak demand area and builders can get hold of the land, and it makes financial sense to build a big development on it, then they will. The big builders will tend to operate regions of typically 600-700 units, so they have to be careful not to over-stretch themselves. This has led to a a number of new regional offices opening, allowing companies to expand gradually into new areas.

How do you see the rest of 2015 and beyond for the housing market?

We expect to see growth of 5-10% in 2015 overall. Looking further ahead, there is no evidence that the market won’t continue to be strong next year. To look any further ahead is a bit of a lottery. As a country, we are registering about 200,000 new homes a year, but how far the growth will go – will we get to 250,000 and beyond? – is hard to say. It certainly won’t be in the short-term. A lot depends on the wider economy. If you have sustained growth in consumer confidence and other economic factors that directly help the building industry, then the growth will continue for a while yet.